What could the impact of Brexit be on your personal finances? At this stage, there is a lot if uncertainty as the result of the vote is fully registered. Further, matters are still developing. At this stage, there are several matters of immediate concern to personal finances:
In practical terms, for every £100, you would get the equivalent of £9 less in Euros or £12 less in Dollars (US) now than before the vote.
Sterling fell to a 31 year low against the dollar on Monday 26 June. The markets are still volatile, but sterling still has substantial value. Although the UK’s credit rating has fallen, it is (currently) by not that much. Although the value of sterling has fallen, there ha e been indications s that it is beginning to bounce back, but nowhere near pre- vote levels.
Although the value of sterling has fallen – watch this space. The markets are constantly adjusting and changing as news unfolds regarding Brexit.
As part of retirement plans, many savers have used their funds to buy an annuity.
An annuity is essentially a regular lifelong income. The annuity rates available – the income that can be bought from such savings – have been steadily falling over the last year. Following the vote, those dates have fallen even more, and quicker. Two major providers of annuities cut their rates on Monday 26 June- with one provider their reducing rates by nearly 2%.
For those considering annuities, picking the best time to invest is key. Consulting with a financial advisor is vital, as is considering whether to invest now, or later. What will happen to those annuity rates is uncertain – but a continuation of the downwards trend is likely.
Uncertainty and volatility are the keywords here.
Depending in what your portfolio consists of, many investors could be seeing losses. Investments in housing or the financial sector have been particularly hard hit. By contrast, the price of gold hit a two year high as the vote result came in. The price of gold often rises in times of uncertainty as it is viewed as a safe, dependable asset.
With the efforts by the Treasury and the Bank of England to convince the financial sector that the UK is still ‘open for business’, after the initial shock it is predicted for the markets to calm slightly. September, when a new Prime Minister is expected, and EU exit negotiations are expected to start, will probably see more volatility.
However, the long term outlook is predicted by experts to be relatively stable. Once matters are ckearer, and it is clearer what a post – Brexit world looks like, then the markets should start to stabilise and improve, with investments starting to pick up in value again. This is both uncertain, and will be seen in the long term.
With oil prices already troubled, the Brexit vote will not improve the oil sector.
The Petrol Retailers Association (PRA) and the AA initially warned that a 2p to 3p increase in the price of a litre of fuel should be expected fairly soon. The first weekend saw only a very slight rise in petrol prices overall; the prices are usually in US Dollars. With the exchange rate how it is, that will translate into rising fuel prices.
OPEC and other agencies by have been working in 2016 to deal with falling wholesale fuel prices globally. The impact of this trend and Brexit will only become evident over time.
Savings and related remain protected. This is an EU wide measure, which means that the first £75,000 of savings per person, is protected should a bank, building society or credit union go under.
Following the Brexit vote, it is unknown whether interest rates will change. The Bank of England will decide that at a meeting if the Monetary Policy Committee in July. Depending on that decision, the value of any savings be could rise or fall.